[Foundation-l] Relocation announcement

[Ben McIlwain]

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Thomas Dalton wrote:
> On 22/09/2007, Thomas Dalton <thomas.dalton at gmail.com> wrote:
>>> That's not quite how it works.  The donations that are coming in aren't
>>> going to be changing, so WMF will still be getting most donations in
>>> USD.  Except, because of the poor exchange rate, it is much more
>>> expensive to do just about everything in the UK, including renting
>>> flats, renting office space, buying food, buying bandwidth, etc.  The
>>> donations wouldn't go nearly as far.
>> If hosting is staying in the US, that's quite a lot of the expenses
>> that will still be being paid in USD. And it's not that the pound is
>> strong, it's the dollar that's weak, so any non-USD donations can be
>> spent in the UK without problems. I haven't looked at the budgets and
>> donation distributions to see how well it would work, but it shouldn't
>> be too big a problem. Remember, WMF is non-profit - one of the biggest
>> problems for profit making businesses is that they have to report
>> profits in one currency, so even if the actual money isn't being
>> converted, they still have to convert it on paper - the WMF doesn't
>> have to worry about that.
> 
> I've just looked up the numbers. So far this year, 26% of donations
> have been in something other than USD. In 2006, Salaries and Wages and
> Operation, which are the only two things that would change currency
> (and not all of them, at that), constituted 20% of total expenditure.
> This is not a particularly accurate way of working out how a change of
> currency would affect things, but I think it's close enough - the
> change in currency would not be a serious issue.

You're still not getting it.  Those 26% of donations that were not in
USD had higher relative spending power than the donations made in USD
because of the relatively favorable exchange rates.  And if the
Foundation were to move overseas, suddenly 74% of its donations would
have significantly less spending power because of unfavorable exchange
rates, which would make everyday operations significantly more expensive.

Just as a gedankenexperiment, imagine a corporation that was run in
Zimbabwe (where the average salary is less than a dollar a day).  Now,
if it's sources of income did not change, how could it possibly afford
to operate out of the United States?  It couldn't.  It would be getting
the same income, but everything would be much more expensive in the US.
 The same is true for the case of the WMF trying to move its operations
to the UK.  Its donations income wouldn't change, but the spending power
of those donations would go significantly downwards because of the
unfavorable exchange rates.
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